Commission Opinion [COM(97) 2007 final - Not published in the Official Journal]Commission Report [COM(98) 706 final - Not published in the Official Journal]Commission Report [COM(99) 507 final - Not published in the Official Journal]Commission Report [COM(2000) 707 final - Not published in the Official Journal]Commission Report [COM(2001) 700 final - SEC(2001) 1750 - Not published in the Official Journal]Commission Report [COM(2002) 700 final - SEC(2002) 1406 - Not published in the Official Journal]Commission Report [COM(2003) 675 final - SEC(2003) 1204 - Not published in the Official Journal]Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its July 1997 Opinion, the Commission considered that there were unlikely to be major problems with gradual approximation to the Community acquis in the medium term, provided that efforts were stepped up. It also considered that the most important issues in the pre-accession period would be the adjustment of monopolies (including import and export issues), access to networks, energy pricing, emergency preparedness (including building up mandatory oil stocks), energy efficiency and environmental standards. In the field of nuclear energy, the Commission found that compliance with Euratom provisions was unlikely to cause major problems, but it called on Lithuania to implement certain international nuclear standards or transpose them into national law. It drew attention to the question of the safety of the Ignalina nuclear power plant and rapid implementation of the scheduled plant closure. Finally, it called for the definition of long-term solutions to the waste problem.

The November 1998 Report concluded that progress in this area had been limited. Lithuania had still to present a satisfactory energy strategy. The safety of the Ignalina nuclear power plant called for particular attention. Lithuania also had to meet the international commitments it entered into in the context of the Nuclear Safety Account (NSA) Agreement, and the independence of the safety authority had to be further strengthened. Adaptation of the internal energy market had to continue. Finally, long-term solutions were needed to the problem of waste.

In 1999, the Commission considered that the administrative structures in the energy sector had made positive efforts to deal with questions relating to the Ignalina nuclear power plant. However, these structures had to be further strengthened.

In its Report of November 2000, the Commission confirmed that the main progress being made by Lithuania was in the area of long-overdue political and operational decisions. Work had started on restructuring the gas and electricity sectors, as well as an ambitious privatisation programme in three principal sub-sectors. Lithuania had adopted two major legislative texts, namely the Laws on electricity and gas. Work to shut down the Ignalina nuclear power station was in progress, but measures still had to be taken to ensure the safety of the site in the interim.

The November 2001 Report confirmed that Lithuania had made further progress in the energy sector, although the restructuring and privatisation of the utilities were suffering delays. Progress in this sector was enhanced by the adoption, in May 2001, of an action plan implementing the national energy strategy. Although Lithuania had made significant progress with preparation for the internal energy market, particularly in gas, particular attention still had to be paid to this field. Nuclear energy played an important part in the Lithuanian energy sector and work had continued on the programme for closure and decommissioning of the Ignalina nuclear power plant. In February 2001, the Lithuanian government had adopted a programme for decommissioning unit 1 of the plant. It had also adopted a series of measures to fund the closure and improve nuclear safety. Security of supply was particularly important for Lithuania since it remained heavily dependent on Russia. Lithuania therefore had to make further progress on this front, particularly to build up oil stocks to bring them into line with the acquis.

The October 2002 Report noted that Lithuania had made considerable progress, particularly with regard to decommissioning Unit 2 of the Ignalina nuclear power plant. Developments relating to this power plant were still a key component of Lithuania's energy policy.

The 2003 report stresses that Lithuania is meeting the commitments and requirements arising from the accession negotiations in the energy sector. However, Lithuania needs to continue to progressively build up its oil stocks in line with the schedule agreed during the negotiations.

The Treaty of Accession was signed on 16 April 2003 and accession took place on 1 May 2004.

The Community acquis in the field of nuclear energy today comprises a framework of legal and political instruments, including international agreements. It currently addresses issues of health and safety (including radiation protection), safety of nuclear installations, management of radioactive waste, investment, promotion of research, creation of a nuclear common market, supplies, safeguards and international relations.

The White Paper (preparing associated CEECs for integration into the EU internal market) underlines, in the section on energy, the need for full application of key internal market directives in combination with EC competition law. As for the nuclear sector, the White Paper refers to problems of supply, safeguards and waste shipments.

EVALUATION

Lithuania has continued to make progress in the energy sector. The Commission considers that Lithuania has achieved a reasonable level of alignment with the acquis, but needs to maintain its efforts, notably on the internal energy market, oil stocks and nuclear energy. Progress in the sector has been based on the national energy strategy adopted in 1999. Since the last annual report Lithuania has adopted an action plan implementing the strategy.

Little progress was made on security of supply over the period covered by the report. Emergency oil stocks stand at approximately 40 days, less than half the 90 days required by the acquis. Despite plans for diversification throughout the energy sector, Lithuania remains heavily dependent on Russian energy supplies (notably oil, gas and nuclear fuels). Lithuania concluded a deal securing a second source from a Russian refinery and aiming at complementary privatisation. This should improve security of supply. A financing plan must be established for this field.

In 2002, Lithuania adopted the Law on the State Oil Product Stocks, but must ensure in addition that the financial means for the necessary investments in building up oil stocks are available.

With regard to competitiveness and the internal energy market, progress has been made, although there have been delays with restructuring and privatisation of the sector. A close watch must still be kept on this point. In the electricity sector in particular, in February 2000 Lithuania, Estonia and Latvia decided to create a common Baltic electricity market and establish links between the three countries. This project should be completed by 2002. Lithuania exports electricity to four other countries: Latvia, Estonia, Poland and once again to Belarus, after settlement of a debt. Lithuania adopted the Law on electricity and the Law on natural gas. The Law on electricity adopted in July 2000 provides the initial basis for alignment, preparing the opening of the market and increasing the monitoring powers of the National Control Commission for Prices and Energy. The Lithuanian government decided to postpone the entry into force of the Electricity Law (and, hence, the start of market opening) by six months, until 1 January 2002. Lithuania will gradually open up the market, which should be fully open as from 2010. The Lithuanian electricity company is being restructured. The European Commission feels that the plans to open up the market in this sector appear to satisfy the current requirements of the Directive concerning common rules for the internal market in electricity.

In the natural gas sector, the Law on natural gas entered into force in July 2001. This provides for opening up 80% of the market. In October 2001 the government also decided on the model for privatisation of the gas company. As regards administrative capacity for the internal energy market, the National Control Commission for Prices and Energy should be strengthened in order to secure its independence.

In 2002, legal alignment has been achieved, while effective market opening for electricity and gas has started. In 2003, 26% of the electricity market and 80% of the gas market were open to competition. The regulatory body, the National Control Commission for Prices and Energy, whose task is to oversee the gas and electricity markets, has been established and is functioning well, but needs to be further strengthened.

In the area of energy efficiency and renewable energy, Lithuania continued to improve energy efficiency and adopted an energy efficiency programme for 2001-2005. Nevertheless, the Commission considers that Lithuania should do more to improve energy efficiency and that the relevant agency should be strengthened.

In the nuclear energy sector, the Accession Partnership identifies as a short-term priority the establishment of a comprehensive, long-term energy strategy and a decommissioning plan for the Ignalina power plant in keeping with the commitments entered into under the NSA agreement. The Lithuanian government has honoured its undertaking to close Ignalina, and in May 2000, the Lithuanian parliament adopted a law on the decommissioning of unit 1 of Ignalina. Lithuania intends to close unit 1 at Ignalina by 2005 and has managed to obtain funding from big industrial countries and international financial institutions to realise this objective, including the European Bank for Reconstruction and Development (EBRD). The precise final date for the decommissioning of unit 2 will be set in the updated national energy strategy to be prepared in 2004. The European Commission underlined that the timetable for adoption of the definite decision on the date for closure of unit 2 should be compatible with Lithuania's timetable for accession. Furthermore, the European Union has made it known that it would like unit 2 to be closed by 2009 at the latest. In February 2001 Lithuania adopted a decommissioning programme for unit 1. The measures to be taken to achieve this objective take account of the environmental and social implications of the closure. Nuclear safety has gained fresh importance with the decommissioning of Ignalina. In March 2000, the government adopted a new civil protection plan to cope with any accidental leaks from the Ignalina site. In 1999, it also adopted a Law on radiation protection and a Law on the management of radioactive waste. Work is continuing on implementation of the second (1997-2005) nuclear safety improvement programme. The European Union has repeatedly emphasised the importance of nuclear safety and in June 2001 the European Council adopted a report on nuclear safety in the context of enlargement. The report includes a general recommendation for all candidate countries to continue their programmes on safe management of their research reactors and radioactive waste. It also makes specific recommendations to each country. In the case of Lithuania, the Council recommends twelve specific measures to ensure safe operation of the Ignalina nuclear power plant until its final closure and of other nuclear installations. Measures should also be taken to ensure adequate resources for the regulatory authorities. As one of the moves to implement the Law on the management of radioactive waste, the Radioactive Waste Management Agency was established in May 2001. Care must now be taken to ensure the implementation of Euratom safeguards. It must be added that Lithuania has concluded a Full Scope Safeguards Agreement with the International Atomic Energy Agency (IAEA) and an Additional Protocol to the same Agreement.

Lithuania has made commitments to close down the Ignalina nuclear power plant. However, special accident prevention measures must be improved.